If you think back to the property crisis in 2008, property values across the US and the world decreased which sent economies in recession. The leverage in the economy was too much, but asset prices went down. Eventually they bounced back, but it took time and it is important to remember over the time, things had to change. In the US case one of the big buyers of real estate was hedge funds which now rent property for income streams, because when there is a recession no one is borrowing money or interest rates are low. If someone has access to credit when asset prices are low, and given the economy should recover, eventually those assets can be sold off at a profit.

In an article by Daisuke Wakabayashi and Joy Dong of the New York Times News Service, China has been going through what the US went through in 2008, but the property market has not improved yet. China’s Evergrande Group was once China’s biggest property developer. It had a sports stadium named after it and the owner was a billionaire. Owning shares meant only an increase and the company was building thousands of apartment buildings which investors were snapping up. Then the downturn came in China and in late August of this year, the shares have been delisted from the Hong Kong stock exchange and there is still $300 billion in debt, the company is working through.

At its peak, the property sector accounted for roughly 30% of China’s economy. Proceeds from land sales to property firms filled local government coffers and many Chinese households turned to real estate, believing it was safe investment for their savings.

One of the great things about China is its infrastructure, on the property boom, new roads and railways and everything else in the urban landscape was built. The local governments made money on the property boom. Then things came to a halt and construction slowed drastically, which is good for absorption of inventory. However, this is China with a central government which encourages some construction for the good of the economy.

The National Bureau of Statistics reported the amount of new housing is down almost 20% from the same period of a year ago, but the number of vacant homes available for sale is more twice the historical average, according to Yicai, a financial media and research group backed by the Shanghai municipal government.

China South City Holdings, a mid sized developer was ordered to liquidate because it had not made significant progress to restructure its debt.

An example of the property market is a apartment in Hefei, an industrial city in central China, the property was bought for $330,000 with upgrades costing $80,000. The property was listed for sale, dozens of real estate agents came to see, but the offer was 15% below the asking price or a loss of $100,000 if the property was sold. With the price ever get back to peak price? The owner does not think so, so a loss on the property at some point is expected.

Goldman Sachs in a research report noted that July sales showed few signs of recovering prices in the real estate market had been linked to top-tier cities.

Even the top tier cities are removing some restrictions, for example to cut down on speculative buying, the government had restricted the number of units someone could buy. The restriction has been eased in Shanghai where people can buy unlimited number of homes in the suburbs.

Linking to dividend paying stocks, asset prices go up and down, when they are down they are great buying opportunities, however you need access to credit. One method to gain credit is buy profitable companies that can pay dividends, the dividends give you cash and you can use to buy companies with low asset prices, have patience as they slowly rise again. Patience is a virtue.

There are more questions than answers, till the next time – to raising questions.

If you ever watched a YouTube video of how a Ford F150 or any other vehicle be made you will see many robots involved in the process. There is a reason why manufacturing plants used to hire many people and now they need less, people are still needed but there are less every year. This is good for the manufacturer because robots can work essentially 24/7, with some time down for regular maintenance. For every job function that involves a great deal of repetition, there is likely a robot for the job. If you watch a YouTube video about the Robot Games, the great deal will likely fall faster than you imagined.

In an article by Farah Stockman of the New York Times News Service, across the manufacturing companies are both large and small companies. Robots are fully utilized in the large companies because they have the resources and expecting long times of usage. However the robots are coming to the smaller companies.

To buy a robot could cost as much as $500,000 which is a lot of money for a small or medium sized company, but renting is feasible. In the article, a company called Formic, a Woodridge, Illinois company takes care of installation, training, programming and repairs. The cost is about $23 a hour roughly the same as a human.

In every smaller manufacturing plant, boxes have to be stacked on pallets to be shipped to distributors to be sent to the end customer. The stacking takes bending of the knees and use of the back, if you do it enough times, possible back injury will result. A robot solves the problem and the people can do something else and there is no particular reason to hire more people.

In the US, there are 244,000 manufacturers and 93% have fewer than 100 workers and 75% have fewer than 20, according to the Manufacturing Extension Partnership. Many of these small business lack the capital and in-house knowledge to integrate new equipment into their assembly lines.

Saman Farid, CEO of Formic says this is where the opportunity is. Formic rents robots to 150 different locations. Formic’s customers are often small, family owned businesses that have to turn down orders because of lack of staffing. Automating the most arduous and repetitive jobs allows them to redirect employees to more productive tasks, keeping them satisfied (and longer employed) and boosting sales.

AAA20 Group, a Las Vegas company leases robots called palletizers that stack boxes onto pallets and wrap them in plastic for $4,950 a month.

RobCo, a German robot-leasing firm, acquired the assets of Rapid Robotics, and will open an office in San Franciso and is equipping a manufacturing facility in Austin, Texas.

Robot rentals make up a tiny but growing slice of the overall market, according to the International Federation of Robotics, an non-profit group that publishes an annual survey of robot manufacturers around the world. About 113,000 transportation and logistics robots were sold globally in 2023, up 35% from the previous year. About 5,000 were rentals.

Linking to dividend paying stocks, similar to most industries the larger companies because of the volume and money involved if they do not do it, lead the way in ensuring, in this case robots are used. A few years go by, the robots begin to come down in price, other companies start using them and when it becomes affordable smaller companies use the same processes. Rentals mean a revenue stream and after that it is doing your homework to pick a public company that is making a profit and can send dividends to you.

There are more questions than answers, till the next time – to raising questions.

With every government policy there is always the rise of unintended consequences. The policy is destined to do something positive, to correct a wrong, to make something better and often whatever has grown up around the old policy has to change. President Trump imposed tariffs and he was thinking of the big items that could be manufactured in the US. The reality is people send packages to family and friends as well as many small and medium sized businesses rely on shipments. The trend has increases with Amazon and relatively low cost shipping so people can order almost anything and they do on a smaller scale.

In an article by Demetris Nellas and Mae Anderson of the Associated Press, ever since tariffs were announced there was an exemption for low-value packages coming into the US. The reason was often it was family sending family items. The exemption known as “de minimis” was for packages less than $800 in value to come into the US duty free. According to US Customs and Border Agency it amounted to 1.36 billion packages sent in 2024 for a value worth $64.6 billion.

It was set to expire and postal services across Europe said they were no longer shipping the packages because someone has to pay the new import duties. In the UK, they would add a 10% duty before shipping.

DHL, the largest shipper in Europe note key questions remain unresolved, how and by whom customs duties will be collected in the future. what additional data will be required, and how the data transmission to the US Customs and Border Protection will be carried out.

A trade framework agreed to the US and the European Union set a 15% tariff on the vast majority of products shipped from the EU. Packages worth less than $800 are also subject to the tariff.

In the Netherlands, PostNL said the Trump administration is pressing ahead with the new duties despite US authorities lacking a system to collect them. PostNL is working with its US counterparts to find a solution. In government there would be overlapping agencies involved and that takes time to find a solution.

If you still believe foreign governments pay the tariff, you are mistaken.

Linking to dividend paying stocks, governments are a wonderful thing, and we all need them, but eventually they make policies which have unintended consequences. Companies do the same thing, but companies tend to be more adaptable, governments will say this is the policy, The people will acknowledge the problem, but the solution is with someone else and not them. Often times in business, the person to help find a solution is closer by, for your investments are the solutions really closer to the customer?

There are more questions than answers, till the next time – to raising questions.

The two largest economies in the world seem to be on different paths when it comes to energy development. In the US, oil is king and anything which does not enhance it seems to conflict with government policy. In the US, the President does not like windmills, although there are windy parts of every country, however he wants to stop them. The President stopped or slowed down solar installations, although the sun shines everyday of the year.

In an article by Ken Moritsugu and Ng Han Guan of the Associated Press, the second largest economy in the world is China and they are working on the world’s largest solar farm on the Tibetan plateau. It will be the size of Chicago.

China is installing solar panels far faster than anywhere else in the world and carbon emissions are down in the first 6 months of 2025, compared to a year earlier.

China’s emissions had fallen in the past, but that was due to a recession, this time demand for electricity is growing, it is up 3.7% this year.

Lauri Myllyvirta, the Finland based author of the study and lead analyst at the Centre for Research on Energy and Clean Energy. She analyzes the data and publishes it on the UK based Carbon Brief website. China installed 212 gigawatts of solar capacity in the first 6 months, which is more than the 178 GW installed in all of 2024 by the US. Electricity for solar power has overtaken hydro power in China to become the country’s largest source of clean energy. Wind power contributed another 51 GW.

The Tibetan plateau in Qinghai province is largely desert and the solar panels allow sheep to graze on the plants and act as a windbreak to reduce dust and sand and slow soil evaporation. When competed there will be 7 million panels which is enough power for 5 million households.

Transmission lines connecting Quinghai province to Henan province is operational and another line to connect to Guangdong is under construction.

One can imagine, solar farms of this size have the ability to drive down the costs of solar panels, increase employment and provide for employment and whatever company to have relatively low-cost electricity to sell to urban consumers.

Linking to dividend paying stocks, every company in the world does a SWOT – strengths, weakness, opportunities and threat analysis. One of the strengths of the any location is the weather, why people live where they live. In the early founding of the country, people lived near the sea because ships were the prime mode of transportation, rivers were found and where there are rapids, hydro power can be harnessed for inexpensive electricity. Now companies can be anywhere but capitalizing on the weather seems to be a good idea for the future.

There are more questions than answers, till the next time – to raising questions.

For every government industrial policy is a complex situation because every government wants its people to be productive, its people reasonably well paid and its people to have good lives. In the world of industrial policy, there are building blocks and at the basic level every government wants those building blocks in its country. The issue is somebody needs to buy the output of the industrial companies. When government gets involved in any industry, invariably it will have different goals than outside investors. Does the company layoff people? how well are people paid? what is the reason for owning the shares? and the list goes on and on. For investors are more interested in their return.

In an article written by Michael Liedtke and Elaine Kurtenbach of the Associated Press, President Trump is changing US industrial policy. The government will take a 10% equity stake in Intel, the shares would be non-voting. The government has taken equity stakes in the past, usually preferred shares and some of the companies recovered after a few years the government made profits when they sold.

Intel the company was once a industry leader and many laptops have a little sign Itel inside, but the personal computer boom changed to mobile and now has changed to AI and Intel missed the mobile and has been slow to the party for AI. The computer chips that Intel is very useful for lower value which many companies used in electronics. The chips are not AI chips.

Softbank Group Corp has made a $2 billion investment in Intel for 2%. Intel’s market value is about $110 billion.

Intel has received money from the CHIPS fund of $2.2 billion of the $7.8 billion that it is pledged. Part of the funds was to built a chips factory in Ohio which has been in the works since 2022.

Linking to dividend paying stocks, while governments and corporations work together and sometimes it is seamless, it is rare for the government to directly take ownership positions in companies. The reason is while they have the same end, how they get there will be the issues. Government has many indirect ways to help corporations including research at universities, offering tax credits or incentives, but generally it is better that they do not take a equity position.

There are more questions than answers, till the next time – to raising questions.

As investors you have 2 sides or a ying and yang, you are often a consumer and an investor. Sometimes the two will mesh with each other and you will be delighted as an investor and sometimes the traits that make the stock good from the investor point of view is lousy for the consumer, unless you are one of the exceptions to the normal business practice.

Many years ago working for a bank, some of the benefits were free checking, higher savings rates, lower interest rates to pay and a host of good things. After leaving the bank, all the things consumers said was wrong, it was easier to see, but still the stock was kept and added to.

A book from the consumer side of banking, in particular the Canadian banking is called Fleeced by Andrew Spence, published by Sutherland House, Toronto, Ontario, 2024. In the book, Mr. Spence outlines how the banks charge higher fees than comparing to either US banks or UK banks.

When it is very good to write a check when there is money in it, the NSF fee in Canada is $50 and to avoid it, the bank charges an overdraft fee per month such as $5.00. In Australia the bank fee is $5.00 Why is that important for a Canadian bank with $400 billion in consumer deposits, the fee income will be in the $4 billion range. A UK bank with $400 billion in consumer deposits takes in $2 billion in fees.

Banking’s key statistic is net interest income, the difference between what it pays you for your savings and what it makes on its loans. In Canadian banks, that is 52% of their income, the other 48% is fees, commissions, income from trading stocks, bonds and other financial products.

Canada’s small group of very large banks so thoroughly dominate the market for financial services that it can manipulate prices, stifle innovation. and choke off or buy competitive threats. The gains flow to the banks and their shareholders.

Credit card interest rates is a cash cow because in 1981, the interest rate on Visa and Mastercard was 25%, the bank rate was 21% or a spread of 2.25%. In 2024, the interest rate is 20%, the bank rate is about 7% or a spread of 13%.

There are other examples in the book about how the financial system is not very consumer friendly, but how good are the returns and how consistent are they: In the years of 2022 and 2023, TD and BMO have operations in Canada and the US – in Canada their return on equity for domestic personal and commercial banking was 37% versus 14% in the US.

Linking to dividend paying stocks, this case was used because the Canadian banks are very profitable companies and there are reasons. The reasons are as an investor you should consider owning shares in the companies is the profits are consistent. Will the government or the market change things, highly unlikely which means the patterns should continue into the future. In other sectors analyst discuss subscription or fee income, some industries do it better.

There are more questions than answers, till the next time – to raising questions.

If you planning for retirement books, one of the phrases is having enough money to maintain the lifestyle you have been living. That phase can easily be individualized because while most people want the same things, how they go about is often very individualist. Recently read a report which suggested even though the US economy is 60% based on consumer spending, those with an income of over $250,000 per household is driving 50% of that spending. The others face all the pressures of higher prices and increased fees.

In an article by Lydia Depillis of the New York Times News Service, economists have been waiting for that multi-faceted storm system to hit the economy and the signs of the storm are everywhere, but what will be the severity of the impact?

James Egelhoh, chief economist with BNP Paribas, thinks the economy is going through a soft patch rather than entering a deep recession.

Plenty of indicators suggest that inflation and the labor market are headed in the wrong direction.

Price growth has sped up, particularly in categories of goods that are heavily imported and now steeply tariffed. One measure is the wholesale price index which is at the highest level since November 2022.

Spending has held up, particularly among higher-income consumers, according to credit card data analyzed by the Bank of America.

Economists are not surprised that tariffs are taking a while to filter into sticker prices. The President’s policies have not been consistent, some are on, some are exempted for a while, some have been threatened but not imposed. However, many countries in Southeast Asia the opportunity to bring in goods before the tariffs has gone.

In the labor market, there is a softness as the Bureau of Labor Statistics reported a large downward revisions to job creation over the past few months.

Some of it is related to AI tools being used by business and need for less people. Some of it is related fewer immigrants in the country as related to the immigration policies of the government. Losing 300,000 government workers likely did not help.

Mark Valentino, President of Citizens Bank, expect the President’s policies will have a impact on the second half of the year.

Linking to dividend paying stocks, when you are investing you are always wondering is the glass half full or half empty. There will be signs of both but it helps if your investments include companies that have near monopoly like conditions. For example, an utility has a near monopoly as long as the economy is doing okay, because people need to turn on the lights. If the economy goes down, there are longer periods when people do not pay bills on time or accounts receivable go up. However, if the number remains relatively low, then the company should be able to make a profit and pay dividend. Often the price of the stock does not double, but it does move upwards because of consistency of earnings.

There are more questions than answers, till the next time – to raising questions.

In the last election, President Trump wanted US steelmakers to make more steel in the US, although when he built some of the buildings with his name of them, he used imported steel. However, he needed the votes and vowed to protect domestic steel making. All eyes went to Pittsburg because at the legacy of Andrew Carnegie and the US Steel as the number one steel maker in the world. Mr. Carnegie died in 1919 and much as changed, including US Steel is not the number one steelmaker in the world. Earlier this year, President Trump gave approval for Nippon Steel to buy the company for $14 billion.

In an article by Marc Levy of the Associated Press, there was an explosion at the steel making plant in Clairton, Pennsylvania which is located in the Mon Valley just outside of Pittsburg. The explosion was significant besides killing 2 workers and injury to 10 others, it took hours to find 2 missing workers beneath the charred wreckage and rubble.

It will considerable amount of money to fix the damage or the spending of more money than anticipated. The production of the facility will be down for a considerable period because the blast affected 2 of the blast furnaces and the other 4 are on reduced production because of the explosion.

Accidents are nothing new at Clariton, the coke ovens use high temperature to make coke. a key component in steelmaking and produces combustible gases and its byproducts.

In the early 1970’s US steel production led the world thanks to 62 coke plants and 141 blast furnaces. No one in the US has built a blast furnaces since. The world leader is presently China and they are heavily invested in coal-based steelmaking. New technology of electric arc furnaces which use electricity not coal. (if you ever heard of Clayton Christensen and the disruptive innovation, you should watch the YouTube video).

Linking to dividend paying stocks, when a company is a market leader the public has some attachments to it, but markets and technology change and it is hard for companies to remain a market leader for generations. It is not impossible, if you examine the Fortune 500 companies from. 1950 to 1970 to 1990 to 2000 to 2010 to 2020 there are changes. It is rare for companies to stay in the group unless they have made acquisitions or merged such as Exxon merged with Mobil to create ExxonMobil and it remains as a top tier company. It is great to own a profitable company which pays dividends but it does not mean you do not continue to evaluate it and look at alternatives.

There are more questions than answers, till the next time – to raising questions.

In many industries companies start supplying one company and fortunately that company gains market share and becomes dominant in the industry. The rise of the company lifts all the suppliers and investors are happy. Eventually sales level out, new suppliers come in and then investors examine the suppliers and see how connected they are to the one company and stock prices go down because the dominance is beginning to fade. Often times this takes a couple of decades but it happens regularly.

In an article by Wen-Yee Lee of Reuters, Taiwan’s Foxconn became a global giant by assembling millions of iPhones for Apple. The rise of Foxconn was Apple was conceived and designed in the USA but manufactured in a Foxconn plant in Taiwan. Foxconn has announced in will be manufacturing iPhones in India so there is more diversification for them. The rise of iPhone this year is iPhone 16 has been very good for suppliers such as Foxconn.

Recently Foxconn has been diversifying into making AI servers and other cloud and networking products so these products are its main business. The AI servers are going to companies such as Nvidia which is one the cutting edge of AI silicon chips.

For Foxconn, consumer electronics accounted for 35% of total revenue in the 2nd quarter down from 54% in 2021. While cloud and networking business represented 41% of total revenue.

Foxconn has been the manufacturing choice of chips for Nvidia since 2002 starting with producing reference designs for Nvidia’s graphic cards. The AI servers and cloud service for data centers started in 2009. At the moment, Foxconn is one of the world’s largest suppliers of both general-purpose and AI servers with a market share of nearly 40% in each category.

Foxconn has announced plans to build new production facilities in Houston and in Mexico.

Foxconn is expecting its AI server revenue to grow 170% in the 3rd quarter of this year.

Linking to dividend paying stocks, when a company is the dominant market share, investors examine the suppliers because the company does not do everything. As long as the company retains it dominant share it lifts the supplier companies, but for the supplier company you need to pay attention to diversification of revenues otherwise as some point alternatives need to be found through your homework.

There are more questions than answers, till the next time – to raising questions.